"The real consensus was lower than what was stated in [First Call]. The
company met with a cluster of analysts before they entered their quiet
period. They gave analysts some uncomfortable body language when talking
about the quarter and so we recalculated our earnings. Some analysts will
tell their firm's sales force to revise the earnings but may not go through
the effort to formally change their recommendation," Lindsay said.

He also noted investors are more concerned about Bay's long-term
performance and had already discounted its ability to perform in the
short-term.

Finally, he added that the company's balance sheet is in better
condition these days, demonstrating a decline in account receivables,
higher turns of inventory, and strength in all product lines and
geographies.

But as indicated in the income statement, the company's performance was
not reassuring.

Much of that red ink can be attributed to an acquisition spree, as Bay
plucked NetICs, a Fast Ethernet switch maker, and Penril Datability
Networks, a modem company, to the tune of $165.5 million. The company also
took a $41.7 million hit for consolidating product lines, inventory, and
office space during the quarter.

Bay reported a loss of 90 cents per share after the charges. The loss per
share, even discounting various expenses, fell far short of
analyst estimates.

Bay reported revenue of $514.5 million for its second fiscal quarter, which
ended December 31. That represents a five-percent drop compared to 1995
second-quarter revenues of $541.6 million. Bay, however, is ahead of 1995
figures for the fist six months of its fiscal year, reporting revenue of
$1.04 billion for the 1996 period, compared with a $999.4 million 1995 figure.

Bay attributed the declining revenue figures for the quarter to increased
pricing competition in the switching market. Bay makes hubs, switches, and
router networking gear that connect individual desktops and groups of
connected PCs and servers to a network.

Newly appointed chairman, president, and CEO David House said the company
spent much of the quarter meeting with customers to develop plans to
augment its current line of products and services.

"We are currently developing action plans, and the input from these
campaigns will form the core of our strategy as we move forward," House
said in a prepared statement.